Parents are responsible for teaching their children all manner or skills they’ll need in adulthood. Managing money is one of those skills that take practice to learn and should start early.
When children are very small, learning the concept of money can be difficult. You can get them acclimated to the idea that everything they have requires money to buy by talking to them about how much things cost. It helps if your child is old enough to count or at least understand that $100 is more than $1.
When you’re out and about, talk about how much things cost. You can say things like “These cookies are $3,” or “It costs mommy $32 to put gas in the car so we can drive around.” It may seem silly, but it will help them get an idea of the value of items.
If you can afford to give your child an allowance, this is a great opportunity to teach them how to save money. You may opt to give your child a base amount of money, like $5 a week, for spending or pay them for doing chores around the house. However, you decide to give them money, determine how much they should save and how much they are allowed to spend. Then, make them start using their money for things. Try having them use their allowance for any candy they want. So, instead of buying them treats when you do the grocery shopping, have them spend their own money. Your child can learn things like where to shop for the cheapest candy to get the most out of their allowance as well as how to limit their candy eating to their budget.
As a good incentive to save money, you can give your child the choice to use their money to buy something they want or put it aside to earn interest. If your child decides to earn interest, you can add a little more money to their savings each week or month depending on how much they put aside. An example of this would be to have them put $10 in their savings, and for every week they don’t touch the money you will add one dollar to their savings. Your child will love that they can have an extra four dollars at the end of the month by doing absolutely nothing.
Another great tool for kids is a bank account. When they’re little, a piggy bank is fine, but as they get older and start to get more money, they need to learn how a bank account works as well as gainan understanding of the concept of money that is not visible still being limited to how much they actually have. This is something that adults can struggle with as well because it’s easy to overspend when you are making purchases with a piece of plastic versus cash. Teach them how to make deposits and withdrawals as well as how to check their balance.